What was the happiest day of your life?
The documentary How to Live Forever asks that innocent question to a centenarian who offered an amazing response.
“Armistice Day,” she said, referring to the 1918 agreement that ended World War I.
“Why?” the producer asks.
“Because we knew there would be no more wars ever again,” she says.
World War II began 21 years later.
One of the most dangerous mental traps is the appealing fiction – something that’s false or uncertain but you want it to be true so desperately that you believe it as an established fact.
I often think about this trap with optimism. Just general long-term optimism – believing that things will be better in the future than they are today.
All optimistic beliefs can be dangerous – potentially appealing fictions – because they’re so comforting, so easy to accept without asking further questions. Pessimism seduces in its own way. But those who accept optimism can be just as blind to reality. Hope often masquerades as optimism when you think things will improve only because the alternative is too scary to contemplate. In her book Optimism Bias, Tali Sharot writes:
The optimism bias protects us from accurately perceiving the pain and difficulties the future undoubtedly holds, and it may defend us from viewing our options in life as somewhat limited. As a result, stress and anxiety are reduced, physical and mental health are improved, and the motivation to act and be productive is enhanced.
I consider myself an optimist. I think things will generally get better over time for most people even if the path between now and then is a neverending parade of setback, surprise, chaos, and disappointment.
But even that qualified optimism needs justification. Why do I think things will get better?
First, they may not. The sole fact that things improved in the past offers no assurance of the future. The late scientist Hans Rosling said, “I am not an optimist. I am a very serious possibilist.”
The very serious possibility that things get better will likely be driven by three things.
1. Most good things happened because of a reaction to a bad thing. So one reason I’m optimistic is specifically because I know there will be problems that push people into fixing what’s wrong with the world.
Physicist David Deutsch says “optimism is a way of explaining failure, not prophesying success.” My interpretation of that is: Saying you are optimistic does not mean you think everything will be flawless and great. It means you know there are going to be failures and problems and setbacks, but those are what motivates people to find a new solution or remove an error – and that is what you should be optimistic about.
Part of the reason commercial air travel is relatively safe is because after every accident comes an intense learn-and-fix process that reduces the odds of future accidents. The same is generally true for businesses, economies, governments, pandemics, etc. The reason things tend to get better is that there are so many blunders, screw-ups, and disasters to learn from. You can’t separate one from the other. Evolution doesn’t teach by showing you what works, but by destroying what doesn’t.
That’s why the Great Depression unleashed a surge of productivity, and World War II produced a staggering number of technological breakthroughs, from nuclear energy to jets to penicillin. The biggest innovations don’t occur when everyone is happy and gainfully employed; they happen when there’s enough stress to push people into gear, forcing problem-solving. Nassim Taleb says, “The excess energy released from overreaction to setbacks is what innovates!”
It sounds callous, but one version of a pessimistic world is one where nothing breaks, no accidents occur, no mistakes are made, no mishaps happen, and every new endeavor is successful. As comfortable as it sounds, all motivation to improve would diminish – which is the opposite of optimism.
2. The constant human desire to one-up past successes, and the generational knowledge transfer, is a pure example of compounding in action.
Skateboarder Tony Hawk landed a 900 – two and a half spins – at the 1999 X Games. It was the biggest achievement the sport had ever seen, the equivalent of the four-minute mile.
It catapulted Hawk into legend status. His video game came out a year later and sold 30 million copies. Six Flags named a rollercoaster after him.
But here’s the craziest part of this story: fifteen years later, an eight-year-old landed a 900.
Hawk was also the first person to land a 720 (two spins) – a feat later accomplished by a second-grader.
A lot of sports work like that.
Just qualifying for the Boston Marathon today requires a time that, 100 years ago, would put you within nine minutes of a world record. A gold-medal gymnast 70 years ago would not make the cut in a local youth competition today.
Does the same hold true for technology, science, and business? Of course. A first-year med student today likely has more medical knowledge than an experienced senior doctor did 50 years ago. The average eight-year-old today knows things about technology that a computer science professor 30 years ago would find bewildering.
Innovation and advancement tend to compound. One person raises the bar over the previous limit, and that becomes the baseline for a new generation to aim for and build upon.
Part of that is a simple generational knowledge transfer. It’s pure compounding: People spend years or decades discovering a new truth, then the next generation begins their careers with those new truths.
Another part is driven by the need to one-up the current leader of a field. Charlie Munger says, “The world is not driven by greed; it’s driven by envy.” You see someone accomplish a new feat and think, “I should be able to do that too – and even better.”
It’s hard to imagine a world where that desire goes away – which makes it hard not to be an optimist.
3. As crazy as the world is, the core drivers of economic growth are still in place.
In his book The Birth of Plenty, investor William Bernstein writes that four things are necessary for long-term economic growth:
Secure property rights.
A scientific view of the world.
Widely available and open sources of funding.
Rapid communication and cheap transport of goods.
There is a long global history backing this up: When just one of those four is missing, progress stops. And as long as all four are in place, progress tends to take care of itself because of my first two points – stress-induced problem-solving and the compounding of knowledge.
As wild as things are – between Covid and political nonsense and inflation and market crashes – all four points are still in place. (The cost of transporting goods surged in 2021, but is already back to pre-Covid levels.)
There is always something to be pessimistic about. Usually dozens of things. But it’s often like being on a flight that’s delayed, and the food is awful, and the turbulence is frightening, and they lose your bags, and the guy sitting next to you is snoring.
Yes, that’s miserable.
But are the engines roaring?
Are the wings intact?
Are the pilots capable?
OK, well that’s all you need.
You’ll get to your destination.
You should remain an optimist.